Foreign Relations of the United States, 1955–1957, American Republics: Central and South America, Volume VII

144. Memorandum From the Deputy Assistant Secretary of State for Inter-American Affairs (Rubottom) to the Secretary of State ¹

Washington , August 6, 1956 .

SUBJECT

• The Panama Canal in the Light of the Suez Crisis

In view of the attempts of Egyptian spokesmen and others to link the settlement of the Suez Canal crisis with a change in the status of the Panama Canal, the following points may be of interest:

1. The treaty status of the Panama Canal greatly differs from that of the Suez Canal.² The Suez Canal Company is a private company operating in territory under Egyptian jurisdiction and under a concession that expires by its own terms in 1968. The Panama Canal is operated by an agency of the United States Government in an area granted in perpetuity to the United States in which the United States exercises broad rights of sovereignty to the exclusion of exercise of such rights by Panama. A summary of the basic differences in the status of the two canals is attached (Tab A).

2. The grant of the Canal Zone under the 1903 Convention is made in perpetuity and in the 1955 Treaty Panama specifically agreed that the provisions of the 1903 Convention, as well as those of the 1936 and 1955 Treaties, may not be modified except by mutual consent.

3. By article III of the Hay–Pauncefote Treaty of 1901³ between the United States and Great Britain it was agreed that “The Canal shall be free and open to the vessels of commerce and of war of all nations observing these Rules, on terms of entire equality, so that there shall be no discrimination against any such nation, or its citizens or subjects, in respect of the conditions or charges of traffic, or otherwise.”

4. Panama openly aspires to limit our exclusive jurisdiction in the Zone, with a view to ultimate joint control and administration or possibly internationalization of the Canal. To this end the Panamanians have evolved a distorted interpretation of Article III of the 1903 Treaty which would restrict the exclusive jurisdiction of the U.S. in the Canal Zone to the five fields of construction, operation, maintenance, sanitation and protection, leaving jurisdiction in all other fields to Panama. We do not agree with this interpretation and Panama is unable to challenge with force our position in the Canal Zone.

5. Panama’s current endeavor appears to be to establish precedents in support of her views on jurisdiction within the Canal Zone and to this end will scrutinize carefully all statements and positions of this Government with respect to the Suez crisis.

6. It is possible that Panama will someday try to take the United States before the International Court of Justice on their basic differences with respect to United States treaty rights in the Zone.

7. Acquiescence in the Panamanian interpretation of Article III, 1903 Convention, would result in administrative chaos within the Zone and imperil the efficient operation and security of the Canal. Insistence upon the sanctity of the treaties governing the Canal is essential to our national interests. We should set an example for Panama by scrupulous observance of our own treaty rights and obligations, but at the same time we should not attempt to pursue a policy of appeasement or new concessions to Panama.

8. We should seek to avoid any precedent or step which might result in demands for the consideration of the internationalization of the Panama Canal in the UN or OAS forums.

A discussion of the current situation of the Panama Canal in the light of developments concerning Suez is appended as Tab B.⁴

[Tab A]

BASIC DIFFERENCES BETWEEN THE SUEZ AND PANAMA CANALS

Suez Canal	Panama Canal
1. Suez Company holds a private concession.	1. Canal Zone rests on public treaty.
2. Canal is operated by Suez Company, a private concern, registered in Egypt.	2. Canal Zone rests on a grant to the United States and is operated by a governmental agency.
3. Suez Canal is an “integral part” of Egypt.	3. Panama Canal is in the Canal Zone over which Panama has granted United States exclusive jurisdiction.
4. The concession of the Suez Canal runs for 99 years, expiring in 1968.	4. The grant to the United States of sovereign rights, power and authority in the Canal Zone is in “perpetuity”.
5. For purpose of guaranteeing status of Suez, it was made subject of multilateral treaty.	5. All responsibilities vis-à-vis Panama contained in bilateral treaties.
6. Construction, financing and management is international.	6. Construction, financing and management not international—undertaken by United States alone.

1. Source: Department of State, Central Files, 611.1913/8–956. Confidential. Drafted by Sowash and Kreig and transmitted to all (20) diplomatic missions in Latin America in circular airgram 1281, August 9. (Ibid.)

   At a meeting of the Secretary’s Staff on August 2 Acting Secretary of State Hoover commented on the Latin American viewpoint on the Suez crisis and the relationship between U.S. actions regarding Suez and the Panama Canal. He asked the Bureau of Inter-American Affairs to prepare a study of the problems which existed or might arise in the Suez crisis which had a parallel in or relationship to the Panama Canal.

2. At a meeting with British officials in London on August 1, including British Foreign Secretary Selwyn Lloyd, Secretary Dulles explained what he believed were the important legal distinctions between the status of the Panama Canal and the Suez Canal.
3. For text, see 32 Stat. 1903.
4. This 7-page memorandum, prepared by Sowash, elaborated upon the points contained in the memorandum of August 6 from Rubottom to Dulles. Another memorandum on the same topic, entitled “Panama Canal vs. Suez Canal”, dated August 10, was prepared as a position paper for the 22-nation London Suez Canal Conference, held August 16–23. That paper, drafted by Whiteman and cleared with Sowash, is in Department of State, UNP Files: Lot 58 D 244, Suez—1956.